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Advantages and Disadvantages of Containerization

The document discusses the advantages and challenges of containerization for freight distribution. The main advantages are standardization, flexibility, lower costs, increased velocity of transport, and security. The main challenges are constraints on terminal sites, the capital intensiveness required, issues with restacking containers, costs of repositioning empty containers, risks of theft and losses, and potential for illicit trade.

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Qasr Alawani - Stock Control
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273 views3 pages

Advantages and Disadvantages of Containerization

The document discusses the advantages and challenges of containerization for freight distribution. The main advantages are standardization, flexibility, lower costs, increased velocity of transport, and security. The main challenges are constraints on terminal sites, the capital intensiveness required, issues with restacking containers, costs of repositioning empty containers, risks of theft and losses, and potential for illicit trade.

Uploaded by

Qasr Alawani - Stock Control
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Advantages and disadvantages of

Containerization
International shipments normally need greater protection when compared to
domestic shipments. Other issues such a handling of products, climate. Potential for
pilferage, communication & language difference, freight costs etc. also influence the
decision of containerization. Also, the bottom, line in all international package
decisions is that the consignment must arrive at its destination undamaged. To
facilitate product handling and protect the product during the movement and storage,
many companies use containers, especially when these moves by sea.
Advantage of containerization:
1) Cost due to loss or damage are reduced
2) Labor costs in freight handling due to the use automated materials handling
equipments.
3) Lower warehousing & transportation costs since containers are more easily stored
and transported.
4) Containers can also be used for temporary storage at ports with limited
warehousing facilities.
Disadvantages:
1) Ports or terminals with container facility may not be available in certain parts of the
world.
2) Even where such facilities are available, delays may occur due to overburden of
loads.
3) Large capital expenditure may be essential to handle ‘container based’ networks.

Advantages and Challenges of


Containerization

Advantages and Challenges of Containerization


Even if containerization conveys numerous advantages to freight distribution, it does
not come without challenges. The main advantages of containerization are:

 Standardization. The container is a standard transport product that can be


handled anywhere in the world (ISO standard) through specialized modes
(ships, trucks, barges, and wagons), equipment, and terminals. Each container
has a unique identification number and a size type code, allowing to be a
unique transport unit that can be managed as such.
 Flexibility. Containers can be used to carry a wide variety of goods such as
commodities (coal, wheat), manufactured goods, cars, and refrigerated
(perishable) goods. There are adapted containers for dry cargo, liquids (oil and
chemical products), and refrigerated cargo. Discarded containers can be
recycled and reused for other purposes.
 Costs. Container transportation offers lower transport costs due to the
advantages of standardization. Moving the same amount of break-bulk freight
in a container is about 20 times less expensive than conventional means.
Containers enable economies of scale at modes and terminals that were not
possible through standard break-bulk handling. The main cost advantages of
containerization are derived from lower intermodal transport costs.
 Velocity. Transshipment operations are minimal and rapid, and ship port
turnaround times have been reduced from 3 weeks to about 24 hours. Because
of this transshipment advantage, transport chains involving containers are
faster. Container shipping networks are well connected and offer a wide range
of shipping options. Containerships are also faster than regular cargo ships and
offer a frequency of port calls allowing a constant velocity.
 Warehousing. The container is its own warehouse, protecting the cargo it
contains. This implies simpler and less expensive packaging for containerized
cargoes, particularly consumption goods. The stacking capacity on ships, trains
(double-stacking), and on the ground (container yards) is a net advantage of
containerization. With the proper equipment, a container yard can increase its
stacking density.
 Security and safety. The container contents are unknown to carriers since it
can only be opened at the origin (seller/shipper), at customs, and the destination
(buyer). This implies reduced spoilage and losses (theft).

The main drawbacks of containerization are:

 Site constraints. Containers are a large consumer of terminal space (mostly for
storage), implying that many intermodal terminals have been relocated to the
urban periphery. Draft issues at the port are emerging with the introduction of
larger containerships, particularly those of the post-Panamax class. A large
post-Panamax containership requires a draft of at least 13 meters.
 Capital intensiveness. Container handling infrastructures and equipment (giant
cranes, warehousing facilities, inland road, rail access) are important capital
investments that require large pools of available capital. This requires the
resources of large corporations or financial institutions. Further, the push
towards automation is increasing the capital intensiveness of intermodal
terminals.
 Stacking. The complexity of the arrangement of containers, both on the ground
and modes (containerships and double-stack trains), requires frequent
restacking, which incurs additional costs and time for terminal operators. The
larger the load unit or the yard, the more complex its operational management.
 Repositioning. Because of trade imbalances, many containers are moved
empty (20% of all flows). However, either full or empty, a container takes the
same amount of space. The observed divergence between production and
consumption at the global level requires the repositioning of containerized
assets over long distances (transoceanic).
 Theft and losses. High-value goods and a load unit that can forcefully be
opened or carried away (on a truck) implied a level of cargo vulnerability
between a terminal and the final destination. About 1,500 containers are lost at
sea each year (fall overboard), mainly because of bad weather.
 Illicit trade. The container is an instrument used in the illicit trade of goods,
drugs, and weapons, as well as for illegal immigration (rare).

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